Trade Agreements

Multi-lateral Agreements

The Republic of Malawi has signed some Multilateral Trade Agreement with different International Organizations. Below is a list of these Multilateral Trade Agreements:

A. COTONOU AGREEMENT

Malawi is part of The Cotonou Agreement.

The Cotonou Agreement is a treaty between the European Union and the African, Caribbean and Pacific Group of States ("ACP countries"). It was signed in June 2000 in Cotonou, Benin's largest city, by 78 ACP countries (Cuba did not sign) and the then fifteen Member States of the European Union. It entered into force in 2003 and was subsequently revised in 2005 and 2010.

The Cotonou Agreement is aimed at the reduction and eventual eradication of poverty while contributing to sustainable development and to the gradual integration of ACP countries into the world economy. The revised Cotonou Agreement is also concerned with the fight against impunity and promotion of criminal justice through the International Criminal Court.

The Cotonou Agreement replaced the Lomé Convention, which had been the basis for ACP-EU development cooperation since 1975. The Cotonou Agreement, however, is much broader in scope than any previous arrangement has ever been. It is designed to last for a period of 20 years and is based on four main principles:

Equality of partners and ownership of development strategies. In principle, it is up to ACP states to determine how their societies and their economies should develop.Participation. In addition to the central government as the main actor, partnership under the Cotonou Agreement is open to other actors (e.g., civil society, the private sector, and local governments).Dialogue and mutual obligations. The Cotonou Agreement is not merely a pot of money. The signatories have assumed mutual obligations (e.g., respect for human rights) which will be monitored through continuing dialogue and evaluation.Differentiation and regionalisation. Cooperation agreements will vary according to each partner's level of development, needs, performance and long-term development strategy. Special treatment will be given to countries that are considered least developed or vulnerable (landlocked or island states).

Probably the most radical change introduced by the Cotonou Agreement concerns trade cooperation. Since the First Lomé Convention in 1975, the EU has granted non-reciprocal trade preferences to ACP countries. Under the Cotonou Agreement, however, this system was replaced by the Economic Partnership Agreements (EPAs), a new scheme that took effect in 2008. These new arrangement provide for reciprocal trade agreements, meaning that not only the EU provides duty-free access to its markets for ACP exports, but ACP countries also provide duty-free access to their own markets for EU exports.

True to the Cotonou principle of differentiation, however, not all ACP countries have to open their markets to EU products after 2008. The group of least developed countries is able to either continue cooperation under the arrangements made in Lomé or the "Everything But Arms" regulation.

Non-LDCs, on the other hand, who decide they are not in a position to enter into EPAs can for example be transferred into the EU’s Generalized System of Preferences (GSP), or the Special Incentive Arrangement for Sustainable Development and Good Governance (GSP+).

B. WORLD TRADE ORGANIZATION (WTO)

Malawi is a WTO member and is part of the WTO agreements. Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations. Each country receives guarantees that its exports will be treated fairly and consistently in other countries’ markets. Each promises to do the same for imports into its own market. The system also gives developing countries some flexibility in implementing their commitments. The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

The fundamental principles which are the foundation of the multilateral trading system can be summarized as follows:

1. Most-favored-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favor (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members.

This principle is known as most-favored-nation (MFN) treatment. It is so important that it is the first article of the GeneralAgreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)(Article 4), although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO.

Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.

2. National treatment: Treating foreigners and locals equally imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of “national treatment” (giving others the same treatment as one’s own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these.

National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.

C. TRIPARTITE FREE TRADE AGREEMENT

The Tripartite Free Trade Area (TFTA) is a proposed African free trade agreement between the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and East African Community (EAC).

On June 10, 2015 the deal was signed in Egypt and will be unveiled at the 25th African Union Summit in South Africa.